ARMED SERVICES BOARD OF CONTRACTAPPEALS Appeal of

-- ) ) Cooper/Ports America, LLC ) ) Under ContractNo. HTC711-15-D-R036 )

APPEARANCES FORTHEAPPELLANT:

APPEARANCES FORTHE GOVERNMENT: ASBCA No. 61461

W. BarronA. Avery, Esq. William T. DeVinney, Esq. William B. O'Reilly, Esq. Katherine L. McKnight, Esq.

BakerHostetlerLLP Washington, DC Jeffrey P. Hildebrant, Esq.

AirForce Deputy ChiefTrial Attorney Caryl A. Potter III, Esq. Lt Col Byron G. Shibata, USAF Maj SondraB. Nensala, USAF Christopher S. Cole, Esq. Danielle A. Runyan, Esq.

Trial Attorneys

OPINION BYADMINISTRATIVE JUDGE O'SULLIVAN ON THE GOVERNMENT'S MOTION TO DISMISS FORLACK OF JURISDICTION

The government has filed a motion to dismiss this appeal for lack ofsubject matterjurisdiction. 

### It argues that appellant, Cooper/Ports America, LLP (CPA) cannot bring the claim that is the subject ofthis appeal because CPA was not the "contractor" within the meaning ofthe Contract Disputes Act at the time the claim accrued. CPA opposes the government's motion and argues that underthe novation agreement executed bythe government, it has the legal right to assert claims that pre-date tlie novation agreement.

STATEMENT OF FACTS FORPURPOSES OF THE MOTION

On 28 January 2015, the government awarded Contract No. HTC71 l-15-D-R036 (the contract) to Shippers Stevedoring Co. ("Shippers") for stevedoring and related terminal services in support ofthe United States Transportation Command (gov'tmot. at 2). Shippers soon beganto incur financial losses onthe contract and entered into

### negotiations with other firms to take over the contract. On 15 November 2016, CPA, Shippers, and the government executed a novation agreement with an effective date of 30 September 2016 

### (id. at 3). On or about 1October 2016, CPA took overperformance ofthe contractpursuantto the novation agreement 

### (id. at 2). CPA has since filed a number ofclaims againstthe government, but the claimthat is the subject ofthis appeal is a claim for unilateral mistake in bid based, in part, onthe fact that Shippers' bid was 63% below that ofthe next lowest bidder, Ports America, one ofCPA's owners, and contained mistakes that should have been apparentto the government (R4, tab 21).

that: Pursuant to the novation agreement, all three parties agreed (in relevantpart)

( 1) 

### The Transferor [Shippers] confirms the transfer to the Transferee [CPA], and waives any claims and rights against the Government that it now has or may have in the future in connection with the contracts.
(2) 

### The Transferee agrees to be bound by and toperform each contract in accordance with the conditions contained inthe contracts. The Transferee also assumes all obligations and liabilities of, and all claims against, the Transferorunderthe contracts as ifthe Transferee were the original party to the contracts. (3) 

### The Transferee ratifies all previous actions taken by the Transferor with respect tothe contracts, with the same force and effect as ifthe action had beentaken by the Transferee.
(4) 

### The Governmentrecognizes the Transferee a:s the Transferor's successor in interest in andto the contracts. The Transferee by this Agreement becomes entitled to all rights, titles, and interests ofthe Transferor in and to the contracts as 

### ifthe Transferee were the original part'/ to the contracts. Followingthe effective date ofthis Agreement, the term "Contractor," as used in the contracts, shall refer to the Transferee.

2

# l I 

# I I (5) Except as expresslyprovided in this Agreement, nothing in it shall be construed as a waiver ofany rights of the Government against the Transferor.
(R4, tab 17 at 8-9) The language ofthe novation agreement closely tracks the suggested format contained in FAR Part 42.1204.

DECISION

The government contends that CPA lacks the required privity ofcontract to qualify as a "contractor" with standing to pursue a claim that accrued at a time that it
was not a partyto the contract (i.e., pre-novation) (gov't mot. at 6). As amplified in its reply brief, the government asserts that there must have been an express assignment of that claim to which the government consented in order for the Board to find a valid government waiver ofthe statutory prohibition against assignment ofclaims (gov't reply at 2-3).

For its part, CPA responds that both the plain language ofthe novation agreement and Board legal precedent make it clear that CPA, as the successor in interest under the contract, has the right to assert a claim accruing prior to the novation (app. resp. at 1).

Pursuant to the Contract Disputes Act of 1978 (CDA), 41 U.S.C. §§ 7101 etseq., the Board'sjurisdiction extends only to appeals brought by a "contractor." A "contractor" is defined as "aparty to a Government contract other than the Government." 41 U.S.C. §7101(7). In the instant case, CPA entered into a novation agreement with both the government and its predecessor, Shippers, in which Shippers waived any claims and rights it might have against the government, and the government recognized CPA as the "successor in interest in and to the contracts," "entitled to all rights, titles and interests ofthe Transferor in and to the contracts as if the Transferee were the original party to the contracts" (R4, tab 17 at 8-9). The Board has previously held that a successor in interest under a novation agreement, pursuant to which it is "entitled to all the rights" ofits predecessor as ifit were "the original party" to the contract, is recognized bythe government as the successor in interest for all purposes, including the right to pursue any claims its predecessor could have pursued. VoughtAircraft Company, ASBCA No. 47357, 95-1 BCA 

## ,r 27,421 at 136,666.

The government argues that, notwithstanding the novation agreement and our decision in Vought, the Federal Circuit's decision in DelmarvaPower & Light Co. v. United States, 542 F.3d 889 (Fed. Cir. 2008) requires that there must have been an express assignment ofa claim, to which the government consented, in order for the Board to find a valid government waiver ofthe statutory prohibition against

3assignment ofclaims (gov'treply at 2-3). We disagree. There was no novation agreement in

### Delmarva to which the government was aparty. 

### Delmarva stands for the proposition that, inthe absence ofgovernment consentby way ofa novation agreement, the governmentmay, in otherways, recognize an assignment ofclaims. In that case, the governmenthad filed with the Court ofFederal Claims a document purporting to accept the assignment ofclaims contained in a TransferAgreementto which it had notbeen a party. 

### In upholding the decision ofthe Court ofFederal Claims validatingthe assignment, the Federal Circuit followed the analysis and reasoning ofits predecessor, the Court ofClaims, in 

### Tuftco Corp. v. UnitedStates, 614 F.2d 740 (Ct. Cl. 1980).

TheAnti-Assignment Act consists oftwo separate statutoryprovisions. 

### Fireman's FundIns. Co. v. England, 313 F.3d 1344, 1349 (Fed. Cir. 2002); 

### Tuftco Corp., 614 F.2d at 744. One provision, 41 U.S.C. 

### § 15(a) (now 41 U.S.C. 

### § 6305) prohibits the assignment ofcontracts, but allows monies due from the United States to be assigned to a financing institution. The other, 31 U.S.C. 

### § 3727(a)prohibits the assignment ofclaims against the United States and contains a similar exception for assignments to financing institutions. Both

### Delmarva and 

### Tuftco recognized that the government may validly waive the application ofthe Anti-Assignment Act; in each
case the issue was whetherthe government, by its actions, had in fact done so. 

### Tuftco involvedthe assignment ofcontracts ratherthan the assignment of claims and, as in

### Delmarva, there was no novation agreement. The court observed that while it is unclearpreciselywhat actions by the government will constitute recognition ofan assignment, "[t]he soundest and most accepted method ofestablishing recognition bythe Government is for all threeparties to enter into a novation agreement." 

### Tuftco Corp., 614 F.2d at 745. However, it continued, a novation agreement is notthe exclusive means ofestablishingrecognition, and where the government's course ofconduct, its statements to the parties, and its dealings with the assignee indicate itrecognizes the assignee as the contractor, recognition has been found. 

### Id. Tuftco proceededto find that the actions ofthe government were sufficient to constitute recognition ofthe assignments.

In this case, it is unnecessary for us to conduct such an analysis because the government expresslyrecognized CPA as the "contractor" in the novation agreement. Moreover, it recognized CPA as "entitledto all rights, titles and interests ofthe Transferor in and to the contracts as ifthe Transferee were the original party to the contracts." To read this broad recognition as excluding the right to pursue a claim accruing to the original contractor, as the governmenturges us to do in this case, would do violence to the clear intent ofthe agreement. Ifthe tables were turned, and CPA had urged us to limit its assumption of"all obligations and liabilities of, and all claims against, the Transferor under the contracts as ifthe Transferee were the original

4party to the contracts" to those liabilities or claims expressly spelled out in the agreementby the government, we doubtthe government would acquiesce.

Thatthe reciprocal provision entitling the transferee to "all rights, titles, and interests" ofthe transferor does not expressly include the word "claims" does not change our conclusion. We reject as lacking merit the government's argument that the absence ofthe word "claims" in the paragraph recognizing CPA as the successor in interest reflects an intent on the part ofthe drafters ofthe FARto exclude from the novation agreement a transferee's ability to pursue pre-novation claims (gov'treply at 7-8). The right to pursue pre-novation claims is well within the government's recognition that CPApossesses all "rights, titles, and interests" as ifit "were the original party to the contracts." 

### VoughtAircraft Co., 95-1 BCA

## ,r 27,421 at 136,666.

The government's motion to dismiss for lack of jurisdiction is denied.

Dated: 2 May 2018



### !concur~

RICHARD SHACKLEFORD Administrative Judge Acting Chairman Armed Services Board ofContractAppeals Administrative Judge Armed Services Board ofContractAppeals

I concur ..:/__,,,

# /Y

# ~ J. REID PROUTY Administrative Judge Vice Chairman Armed Services Board ofContractAppeals

I certify that the foregoing is a true copy ofthe Opinion and Decision ofthe Armed Services Board ofContractAppeals in ASBCA No. 61461, Appeal of Cooper/Ports America, LLC, rendered in conformance with the Board's Charter.

Dated:



### 5 JEFFREY D. GARDIN Recorder, Armed Services Board ofContract Appeals